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THE VALUE OF SOCIAL NETWORK AS FUNCTION OF NUMBER OF USERS

Year 2012, Volume: 4 Issue: 1, 181 - 189, 01.06.2012

Abstract

At the presence of network externality, the value of a product or service is dependent on the number of others using it. This means that the more social network has subscribers, the greater its value. Metcalfe’s law states that network value is proportional to the number of users in square. Reed's law takes into account the possibility of groups’ formation. In this case, network value scales exponentially with the size of the network. Odlyzko is much more moderate. He argues that the incremental value of adding one person to network of n people is approximately the n-th harmonic number. From early ages of television Sarnoff stated that the value of a broadcast network is proportional to the number of viewers. This paper deals with the problem of determining the value of such social networks as Facebook, Twitter, LinkedIn etc. as function of the number of users and other parameters

References

  • Bass, Frank (1969), “A new product growth model for consumer durables”, Management Science, Vol. 15, No. 5, pp. 215–227.
  • Briscoe, Bob, Odlyzko, Andrew, Tilly, Benjamin (2006), “Metcalfe's law is wrong - communications networks increase in value as they add members-but by how much?”
  • IEEE Spectrum, Vol. 43, No. 7, pp. 34 - 39. Economides, Nicholas, Himmelberg, Charles (1995), “Critical mass and network size with application to the US fax market”. Discussion Paper no. EC-95-11, Stern School of Business, N.Y.U.
  • Farrell, Joseph, Saloner, Garth (1985), “Standardization, compatibility, and innovation”,
  • Rand journal of economics, Vol. 16, No. 1, pp. 70-83. Gunasekaran, Vinoth, Harmantzis, Fotios (2007), “Emerging wireless technologies for developing countries”, Technology in Society, Vol. 29, No.1 pp. 23-42.
  • Katz, Michael, Shapiro, Carl (1985), “Network externalities, competition, and compatibility”, American economic review, Vol. 8, No. 3, pp. 424-440.
  • Liebowitz, Stan, Margolis, Stephen (1994). “Network externality: an uncommon tragedy”,
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  • Empirical generalizations and managerial uses”, Marketing Science, Vol. 14, No. 3, pp. 88. Reed, David (2001), The law of the pack, http://www.ecademy.com/downloads/reedslaw.pdf [Accessed 2.12.2010]
  • Shapiro, Carl, Varian, Hal (1999), Information rules: a strategic guide to the network economy, Harvard Business Press.
  • Swann, Peter (2002), “The functional form of network effects”, Information Economics and Policy, Vol. 14, No. 3 pp. 417–429.
  • US Census Bureau (2012), U.S. & World Population Clocks, http://www.census.gov/main/www/popclock.html [Accessed 2.10.2012].
Year 2012, Volume: 4 Issue: 1, 181 - 189, 01.06.2012

Abstract

References

  • Bass, Frank (1969), “A new product growth model for consumer durables”, Management Science, Vol. 15, No. 5, pp. 215–227.
  • Briscoe, Bob, Odlyzko, Andrew, Tilly, Benjamin (2006), “Metcalfe's law is wrong - communications networks increase in value as they add members-but by how much?”
  • IEEE Spectrum, Vol. 43, No. 7, pp. 34 - 39. Economides, Nicholas, Himmelberg, Charles (1995), “Critical mass and network size with application to the US fax market”. Discussion Paper no. EC-95-11, Stern School of Business, N.Y.U.
  • Farrell, Joseph, Saloner, Garth (1985), “Standardization, compatibility, and innovation”,
  • Rand journal of economics, Vol. 16, No. 1, pp. 70-83. Gunasekaran, Vinoth, Harmantzis, Fotios (2007), “Emerging wireless technologies for developing countries”, Technology in Society, Vol. 29, No.1 pp. 23-42.
  • Katz, Michael, Shapiro, Carl (1985), “Network externalities, competition, and compatibility”, American economic review, Vol. 8, No. 3, pp. 424-440.
  • Liebowitz, Stan, Margolis, Stephen (1994). “Network externality: an uncommon tragedy”,
  • Journal of economic perspectives, Vol. 8, No. 2, pp. 133-150. Mahajan, Vijay, Muller, Eitan, Bass, Frank (1995), “Diffusion of new products:
  • Empirical generalizations and managerial uses”, Marketing Science, Vol. 14, No. 3, pp. 88. Reed, David (2001), The law of the pack, http://www.ecademy.com/downloads/reedslaw.pdf [Accessed 2.12.2010]
  • Shapiro, Carl, Varian, Hal (1999), Information rules: a strategic guide to the network economy, Harvard Business Press.
  • Swann, Peter (2002), “The functional form of network effects”, Information Economics and Policy, Vol. 14, No. 3 pp. 417–429.
  • US Census Bureau (2012), U.S. & World Population Clocks, http://www.census.gov/main/www/popclock.html [Accessed 2.10.2012].
There are 12 citations in total.

Details

Other ID JA64DH25TM
Journal Section Articles
Authors

Petras Lickus This is me

Publication Date June 1, 2012
Published in Issue Year 2012 Volume: 4 Issue: 1

Cite

APA Lickus, P. (2012). THE VALUE OF SOCIAL NETWORK AS FUNCTION OF NUMBER OF USERS. International Journal of Economics and Finance Studies, 4(1), 181-189.
AMA Lickus P. THE VALUE OF SOCIAL NETWORK AS FUNCTION OF NUMBER OF USERS. IJEFS. June 2012;4(1):181-189.
Chicago Lickus, Petras. “THE VALUE OF SOCIAL NETWORK AS FUNCTION OF NUMBER OF USERS”. International Journal of Economics and Finance Studies 4, no. 1 (June 2012): 181-89.
EndNote Lickus P (June 1, 2012) THE VALUE OF SOCIAL NETWORK AS FUNCTION OF NUMBER OF USERS. International Journal of Economics and Finance Studies 4 1 181–189.
IEEE P. Lickus, “THE VALUE OF SOCIAL NETWORK AS FUNCTION OF NUMBER OF USERS”, IJEFS, vol. 4, no. 1, pp. 181–189, 2012.
ISNAD Lickus, Petras. “THE VALUE OF SOCIAL NETWORK AS FUNCTION OF NUMBER OF USERS”. International Journal of Economics and Finance Studies 4/1 (June 2012), 181-189.
JAMA Lickus P. THE VALUE OF SOCIAL NETWORK AS FUNCTION OF NUMBER OF USERS. IJEFS. 2012;4:181–189.
MLA Lickus, Petras. “THE VALUE OF SOCIAL NETWORK AS FUNCTION OF NUMBER OF USERS”. International Journal of Economics and Finance Studies, vol. 4, no. 1, 2012, pp. 181-9.
Vancouver Lickus P. THE VALUE OF SOCIAL NETWORK AS FUNCTION OF NUMBER OF USERS. IJEFS. 2012;4(1):181-9.